Unemployment falls: reaction

Figures released by the Office for National Statistics today showed that
unemployment fell by 17,000 in the four months to February, although the
number of people claiming benefits rose. Here is how analysts have reacted
to the announcement:

“Despite the overall firmer tone of the latest labour market data, we retain the view that unemployment is headed up over the coming months. We suspect that likely below-trend growth will mean that the private sector will be unable to fully compensate for the increasing job losses in the public sector that will result from the fiscal squeeze that is now really kicking in.”

John Salt, director, Totaljobs.com

“The small drop in unemployment will come as a welcome surprise to the coalition, which is facing a drubbing in local elections in May. The small fall adds credence to their belief that the private sector is able to off-set cuts to the public sector, which is now beginning to shed staff in earnest.”

James Knightley, economist, ING

“With inflation running at 4pc, whichever way you look at it, pay is failing to keep pace with the cost of living so it is unsurprising to see retailers struggling. This increasingly suggests May will see rates left at 0.5pc.”

“The UK labour market recovery is looking a bit healthier, but the continued falls in real pay do not bode well for consumer spending.

“Employment rose by a healthy 143,000 in the three months to February, suggesting that the private sector is - for now - managing to offset public sector job cuts.”

Hetal Mehta, UK economist, Daiwa Capital Markets Europe

"Mixed signals from the labour market. The fall in the headline unemployment rate is without doubt good news, but it is too early to be getting carried away.

"The more timely claimant count figures showed a surprise increase in unemployment in March, and with the majority of the public sector job cuts still to come, this does not signal a turnaround in the labour market.”